Significant spells of unemployment for more than 1 in 10 graduates 41% of graduates have worked unpaid at some point Graduate earnings advantage slowly declined – estimated at 2% annually

40% working in non-graduate jobs 60% increase in debt over ten years - 44% English graduates owe £20,000+ Even in the face of adversity graduates would do it all again – 96%

Graduate transition into the labour market has been crippled by a harsh economy yet they are optimistic about their future and fair better than non-graduates, according to a £1.5m study launched at a conference today (7 November 2012).

Futuretrack¹, commissioned by HECSU and undertaken by the Institute for Employment Research at the University of Warwick, provides unprecedented evidence of student experiences and transition into employment. It has been tracking 2006 UCAS applicants and the final stage of the study² reports their experiences six years on after they graduated into one of the worst recessions in history, comparing perceptions from previous stages of their journey.

More than one in ten Futuretrack graduates have experienced significant spells of unemployment, which for some, look set to continue. Black and Asian graduates and those with lower degree classes are particularly vulnerable³. There is also strong evidence that graduates are taking non-graduate jobs, in which they don’t consider their skills and knowledge to be useful.

The report cites the Class of ‘99⁴ study, which showed that18 months after graduation 26% of this cohort were in non-graduate jobs. It is estimated that if Futuretrack graduates had experienced the same labour market conditions, around 23% would be in non-graduate jobs – the reality is 40%. White females with a 2:2 degree are more likely to hold a non-graduate position⁵.

Despite the tough labour market, graduates are remarkably positive. Sixty per cent of working graduates were currently satisfied with their job and this rose to 70% when asked about their future career options. Two-thirds of graduates were optimistic about their long-term career prospects and 96% would still do a degree if starting again.

Overeducated and underemployed?
There has been much debate about whether graduates are equipped with the skills necessary to access and fulfil a job. Between Stage 3 of the study (when respondents were finalists) and Stage 4 of the study (1½- 2½ years after graduation) graduates had become less likely to agree that their university experience had benefited their job hunt. Those who felt their subject had been an advantage fell from 77% to 60%, graduates who believed their institution had benefited them fell from 67.6% to 50% and those who felt learnt skills had been an advantage fell from 78% to 70%.

Futuretrack showed that while 75% of graduates believed that they had all the skills employers sought when recruiting for the type of job they wanted, only 62% believed they were using their course skills in their current job and 61% thought their job was apt for someone with their skills and qualifications.

Impact of debt
The average level of debt on graduation for the Class of ‘99 was £7,960. Adjusting for inflation, this would be equivalent to £10,300 in 2009. Debt on graduation for the Futuretrack cohort studying at the same institutions as those who responded to the earlier survey was £16,000. This reflects increased tuition fees in England from 2006 to£3,000 and equates to a 60% increase in debt over ten years.

For those who studied at English institutions 44% graduated with debts of £20,000 or more. Only one in six of those graduating from Scottish universities had similar debt levels (tuition fees have been waived in Scotland). Despite high debts, approximately 60% of graduates agreed that their degree had been good value for money and only a quarter disagreed.

Work experience and unpaid work
Futuretrack shows that those who did work experience (79%) were more likely to say their job was appropriate for someone with their skill level and qualifications. Those who did no work experience at all (21%) were more likely to feel that their job was inappropriate for them, and were more likely to be in unpaid work or non-graduate jobs.

Most (59%) graduates did no unpaid work at all, but 30% did some during their course, and 6% did it both during and after leaving university. Those who worked unpaid only after graduating (5%), had a higher likelihood of being unemployed or in a non-graduate job. But unpaid work undertaken during the course increased the likelihood of gaining a graduate job by one and a half times.

Graduates v those who did not get a degree
Just 8% of the 2006 cohort did not graduate. Despite being in the labour market for longer, they were only slightly more likely to be in employment, less likely to believe they had skills that employers looked for and not as optimistic about their long-term career prospects as graduates.

Non-graduates also earned on average less than graduates: in their first job, 70% of non-graduates earned less than £15,000 compared with 45% of graduates. While a degree continues to provide a significant earnings advantage, the benefit appears to have been declining slowly over the past decade, possibly by as much as 2% per annum relative to average earnings in the economy.

Whilst male graduates continue to earn more than females (modal earnings categories £24,000-£26,999 and £21,000-£23,999 respectively), there is new evidence that the decline in earnings advantage has been slower for females than for males.

Jane Artess, research director at HECSU says: “Graduates’ perceptions of the value of their degree in finding work changes remarkably after they have been in the labour market for some time, which helps us to understand the magnitude of the downturn on this group. Students focus mainly on their studies while at university, particularly in their final year, so graduating into one of the worst recessions in history has hit them particularly hard. What’s gratifying is that even in the wake of the recession, the onset of higher fees and large debts, graduates remain positive in the face of adversity with great confidence that their degree has been worth it.”

Professor Kate Purcell who led Futuretrack at the Institute for Employment Research, University of Warwick, adds: “Futuretrack is the most ambitious study of the graduate labour market to date – we have unprecedented levels of data that warrant continued investigation. In particular we have a great deal of evidence about the impact higher education has, and doesn’t have, on social mobility.”

Professor Peter Elias, co-investigator at the University of Warwick comments: “One of the more continuing and disturbing findings, which underlies all of the salary analyses, is the gender pay gap in graduate earnings that we found in a study ten years ago has persisted and shows no sign of diminishing. Male graduates with similar qualifications, experience and in similar jobs earn more than females at the outset of their careers.”

This is a summary of an extensive report, which also covers the experiences of international students and the impact of extra-curricular activities⁶. For the full report visit www.hecsu.ac.uk

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Footnotes

¹ Futuretrack is the most ambitious study ever undertaken of the relationship between higher education and employment. Funded by HECSU in collaboration with UCAS, Futuretrack has been conducted by the Institute for Employment Research at the University of Warwick.

Two cohorts of UCAS applicants have been surveyed at four points in their careers: as they are about to embark on higher education, one year later, after three years of study and finally in 2010 and 2011. The large sample enables an unparalleled and detailed analysis of the significance of variables such as minority ethnic group, gender, subject studied, plus regional and socio-economic background.

² The final stage of the study (November 2011 to February 2012) surveyed more than 17,000graduates, six years after they applied to UCAS in 2006. The Futuretrack Stage 4 report launched today (7 November 2012) reveals the new findings, incorporating insight and analysis from previous stages of the survey.

³ Probability of graduates experiencing unemployment for six months or more after graduation

More likely	Less likely
Male	Female
Asian, Black, Mixed	White
Arts & design	Medicine & dentistry and allied subjects, education
2:2 degree class	2: 1 or First degree class

 ⁴ A study by Purcell et al. in 2005 tracked the 1999 cohort for 3½ years after graduation

 ⁵ Probability of graduates spending more than nine months in non-graduate employment

More likely	Less likely
3 year courses	5 or more year courses
	21 years old or older
Female	Male
Neither parents hold a degree	Both parents hold a degree
White	Asian
Biology, vet science, agriculture, build & plan, law, business & admin, linguistics and classics, history & philosophical, arts & design	Subjects applied to medicine
2:2 degree class	First degree class

⁶ Futuretrack report themes:

• Routes into employment, further education and unemployment
• Impact of debt on opportunities accessed
• Earnings
• What is a graduate job? Current jobs and the use of HE knowledge and skills
• Impact of employment and work experience during study and unpaid work after graduation
• Use of extra-curricular HE resources and access to opportunities
• Reflections on the benefits of HE
• Experiences, outcomes and evaluations of international graduates
• The comparative experience of those who took alternative routes

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Notes to editors

HECSUis currently celebrating its 40^th year as a registered charity that supports the work of higher education careers services in the UK and Republic of Ireland. It funds major research projects that benefit the higher education careers sector. Graduate Prospects is the commercial subsidiary of HECSU and has been bringing students, graduates and recruiters together for 40 years.

Media enquiries: Clare Schofield, PR Officer, T: 0161 277 5285 E: c.schofield@prospects.ac.uk

Sarah Kite, marketing officer, T: 0161 277 5327 E: s.kite@prospects.ac.uk

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